The recent rebound in Ethereum’s price—up 78% since June 2022—has sparked cautious optimism across the crypto market. However, a closer look at on-chain trading activity reveals troubling signs beneath the surface. Despite the recovery, Ethereum (ETH) is showing weak volume support, raising concerns that the rally may be running out of steam. A sharp 90% decline in trading volume since March 2020 suggests significantly reduced market participation, potentially increasing the risk of a major correction.
This article dives into key technical and on-chain indicators to assess whether Ethereum’s current price momentum is sustainable—or if investors should prepare for a pullback.
The Volume Collapse Behind ETH’s Price Recovery
One of the most telling signs of market health is trading volume. Historically, strong price rallies are supported by increasing volume, indicating broad investor confidence and active participation. But in Ethereum’s case, the opposite is true.
The “volume profile” metric—which maps trading activity across different price levels—shows a dramatic drop in engagement. In March 2020, during the market bottom triggered by global financial turmoil, Ethereum saw approximately 160 million ETH traded across the $85–$270 price range on weekly charts. Notably, selling pressure exceeded buying by about 4 million ETH at that time, reflecting panic-driven liquidations.
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However, what followed was a powerful recovery. From July to November 2020, as ETH broke above $270, buying interest surged. About **64.25 million ETH** changed hands between $270 and $450, with buyers outnumbering sellers by nearly 1 million ETH. This strong accumulation phase laid the foundation for the 2021 bull run, culminating in an all-time high near $4,950 in November 2021.
What made that rally credible was the alignment between price and volume: as prices rose, so did participation.
A Weaker Foundation in the 2022–2025 Recovery
Fast forward to the 2022 market bottom, and the picture looks far less convincing. When Ethereum began recovering from its $900 low in June 2022, total trading volume at key support levels amounted to only 12.5 million ETH—a staggering 90% decrease compared to the 2020 rebound zone.
This lack of volume suggests limited conviction among traders and institutions. Fewer participants are stepping in to buy at perceived lows, indicating weaker foundational demand.
Even more concerning is the growing selling pressure during the current recovery phase. On daily charts, the “Point of Control” (POC)—the price level with the highest concentration of open positions—around $1,550 shows a net volume of 8.21 million ETH, with sellers outnumbering buyers by 170,000 ETH.
This imbalance implies that many holders who bought near current levels are still underwater or barely breaking even, making them likely to offload positions if prices stabilize or dip slightly.
On-Chain Data: Profit-Taking Pressure Looms
Another critical indicator comes from Ethereum’s on-chain supply distribution—specifically, the percentage of circulating ETH currently in profit.
As of early March 2025, approximately 65% of all ETH in circulation is held at a profit. While this may sound positive, it actually presents a risk: a large portion of investors have unrealized gains and could choose to sell at any moment, especially if macroeconomic conditions shift or volatility increases.
Historically, true market bottoms occur when this metric falls below 30%, meaning most holders are temporarily at a loss. This happened in March 2020 and again briefly in mid-2022. Such conditions often signal maximum pessimism—and set the stage for strong recoveries once sentiment turns.
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Today’s 65% figure suggests we are far from such a capitulation event. Without a flush-out of weak hands or fresh inflows from new buyers, sustained upward momentum remains questionable.
Comparing Market Cycles: Confidence vs. Caution
In 2020, Ethereum’s rebound was fueled by growing institutional interest, DeFi’s explosive growth, and anticipation of Ethereum 2.0 upgrades. Traders weren’t just speculating—they were investing in a narrative of long-term value creation.
In contrast, the 2022–2025 recovery lacks a similarly powerful catalyst. While Ethereum remains central to decentralized applications and Layer-2 ecosystems, regulatory uncertainty, competition from alternative smart contract platforms, and slower-than-expected adoption of scaling solutions have dampened enthusiasm.
Moreover, trading activity across major exchanges and decentralized platforms has remained subdued. Lower volume across spot and derivatives markets reinforces the idea that this rally is being driven more by technical rebound dynamics than fundamental demand.
Key Takeaways for Investors
- Low volume undermines price gains: ETH’s 78% rebound lacks strong trading support, increasing vulnerability to pullbacks.
- Selling pressure persists at key levels: The POC at $1,550 shows more sellers than buyers, indicating weak conviction.
- Most holders are still profitable: With 65% of supply in profit, profit-taking could trigger sharp declines if sentiment sours.
- True bottom likely requires deeper capitulation: A drop below 30% in-profit supply would signal stronger long-term buying opportunity.
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Frequently Asked Questions (FAQ)
Q: Why is trading volume important for cryptocurrency price movements?
A: Volume reflects market participation and conviction. Rising prices with increasing volume suggest strong demand and sustainability. Conversely, price increases on low volume may indicate weak support and higher risk of reversal.
Q: What does a 90% drop in Ethereum trading volume mean for investors?
A: It signals reduced interest or confidence among traders during key price movements. This lack of engagement can make rallies fragile and more susceptible to sell-offs when negative news or macro shifts occur.
Q: How reliable is the “in-profit supply” metric for predicting market bottoms?
A: Historically very reliable. When most holders are at a loss (below 30% in profit), panic selling often exhausts bearish pressure, paving the way for recoveries. It's a useful tool for identifying long-term entry points.
Q: Is Ethereum’s current price rally sustainable without higher volume?
A: Unlikely in the long term. While short-term momentum can persist due to algorithmic trading or sentiment shifts, durable bull markets require growing adoption and increased trading activity to absorb selling pressure.
Q: What could trigger renewed buying interest in Ethereum?
A: Catalysts like favorable regulatory clarity, major protocol upgrades (e.g., further scalability improvements), increased institutional staking, or broader adoption of Web3 applications could reignite strong demand.
Q: Should I sell my ETH if volume remains low?
A: Not necessarily—but caution is warranted. Consider your investment horizon and risk tolerance. Low volume doesn’t mean immediate decline, but it does increase uncertainty. Using stop-losses or scaling out of positions can help manage risk.
Ethereum remains a cornerstone of the decentralized economy, but its current price trajectory raises valid concerns. Without stronger volume confirmation or deeper market cleansing, the path ahead may be volatile. Investors should stay informed, monitor on-chain trends closely, and use data-driven tools to navigate this uncertain phase.